Seyfarth Synopsis: In an EEOC-initiated religious discrimination suit involving an employer’s imposition of “Onionhead” religious practices, a federal district court in New York denied the employer’s motion for a new trial after it reduced a jury award from $5.1 million to $1.8 million.

Peeling back the onion on this case, underneath a bizarre set of facts lies some important takeaways for employers. This ruling is instructive in terms of how the EEOC can use an expansive definition of what constitutes a “religious belief” for purposes of Title VII discrimination, and how expanded EEOC investigations can lead to substantial multi-claimant settlements.

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Case Background

As we blogged about here, in EEOC v. United Health Programs of America, Inc. and Cost Containment Group Inc., No. 14-CV-03673, 2020 U.S. Dist. LEXIS 39587 (E.D.N.Y. Mar. 6, 2020), the EEOC brought an action alleging the defendants discriminated against a group of former employees on the basis of religion based on concepts known as “Onionhead” and “Harnessing Happiness.” Around 2007, to address corporate culture issues, the defendants hired their CEO’s aunt, who had developed a program called Onionhead. They described Onionhead as a multi-purpose conflict resolution tool, while the employees characterized it as a system of religious beliefs and practices. Although Onionhead was initially geared towards children, the program was expanded to apply to adults, and it further became known as “Harnessing Happiness.”

The claimant employees alleged that Onionhead and Harnessing Happiness required them to do things like use candles instead of lights to prevent demons from entering the workplace; conduct chants and prayers in the workplace; and respond to emails relating to God, spirituality, demons, Satan, and divine destinies. The claimants alleged they were terminated either because they rejected Onionhead’s beliefs or because of their own non-Onionhead religious beliefs, while other employees who followed Onionhead were given less harsh discipline.

After three former employees filed charges of discrimination in 2011 and 2012, the EEOC issued a letter of determination on March 13, 2014. After unsuccessful conciliation efforts, the EEOC filed suit on October 9, 2014 on behalf the three employees who filed charges of discrimination and an additional seven employees that it discovered during its investigation. The EEOC subsequently moved for summary judgment as to the specific issue of whether Onionhead was a religion for purposes of Title VII. The defendants cross-moved for summary judgment as to several other claims involving religious discrimination. The Court granted the EEOC’s motion for partial summary judgment as to the discrete issue of whether the Onionhead beliefs constituted a religion. Thereafter, in a mixed verdict, a jury initially awarded $5.1 million in compensatory and punitive damages to the workers at the center of the suit, but that amount was later reduced to $1.8 million. The defendants moved for judgment as a matter of law and for a new trial or, in the alternative, for remittitur.

The Court’s Decision

The Court denied the defendants’ motions. First, the Court held there was abundant evidence in the trial record supporting the jury’s finding that defendants created an objectively hostile or abusive work environment on the basis of religion. Id. at *14. The Court further opined that the record was, “replete with examples of the severity and pervasiveness of Onionhead’s religious practices and imagery, in the workplace, the unreasonable interference with the employees’ work and the alteration of work conditions for the worse.” Id. at *15.

Turning to damages, defendants argued that in “garden variety” cases, emotional distress damages in excess of $35,000 are inappropriate based on New York federal case law. Id. at *39. The Court rejected this argument, noting it will not cap garden variety emotional distress damages based on outlier cases. In support of upholding the emotional damages award, the Court identified voluminous examples of evidence that supported hostile work environment claims, including: hand-holding prayers, forced hugging, visual Onionhead paraphernalia and literature, incense, and an out of state retreat for a “spa weekend.” Id at *49. Accordingly, the Court upheld the employees’ compensatory damages awards.

Finally, after the jury originally awarded two claimants a combined $560,000, the Court reduced these amounts to $10,000 each in accordance with Title VII’s statutory maximum. Id. at *66. In response to defendants’ argument that “[p]unitive damages are reserved for egregious cases,” the Court explained that the Second Circuit has held that Title VII’s statutory damages cap is not reserved for the most egregious cases of employment discrimination, and that “Defendants’ own policies and inaction demonstrate their knowledge of the unlawfully discriminatory hostile work environment that they created and implemented in the face of a perceived legal risk.” Id. at *71. Accordingly, considering the evidence in the light most favorable to the plaintiffs, a reasonable jury would not have been compelled to find in the defendants’ favor regarding punitive damages. As such, the Court denied the defendants’ motions for judgment as a matter of law and for a new trial, or, in the alternative, for remittitur.

Implications For Employers

Beyond the unparalleled facts of this case, there are some key takeaways for employers. First, employers who implement wellness programs or other measures to improve corporate culture should carefully monitor these programs to ensure they do not impose any spiritual or religious beliefs on employees. The Court’s opinion has some useful things to say about when such practices reach a level of “severity and pervasiveness” such that they create an objectively hostile or abusive work environment. Second, this ruling demonstrates that courts will consider belief systems such as Onionhead to be a religion for purposes of Title VII, and therefore employers should keep that in mind when employees request accommodations. Finally, this matter started as an EEOC investigation with three claimants, but grew into a lawsuit with ten claimants after seven additional claimants were discovered during the EEOC’s investigation. As such, employers absolutely need to pay attention to EEOC investigations and mount early and aggressive defense strategies should the Commission overreach.